Revenues increased to over $25 million in 2011, a 23% increase from 2010. The overall revenue increase of $4.6 million was derived from a $3.3 million increase in branded business and $1.3 million increase in private label business.

Our top ten branded SKUs, which drive almost 70% of our business, grew more than 24% in 2011.

Overall, gross profit of 30% remained the same vs. 2010, despite cost increase pressures in 2011.

Sales and marketing costs increased by 7%, to $2.5 million in 2011. As a percentage of revenues, selling and marketing costs decreased to 10% in 2011, compared to 11% in 2010.

General and administrative expenses, before one-time charges of $327,000, decreased by approximately 7% in 2011, as compared to 2010.

Earnings before non-cash items and finance costs (modified EBITDA) increased 83% to $834,000 during 2011, as compared to $456,000 in the prior year period. (See EBITDA table at end of this release for further non-GAAP information).

Net loss for 2011 decreased 28% to $941,000, or $0.09 per share, compared to a loss of $1,310,000 a year earlier.

Working capital as of December 31, 2011 increased 44% to $2.6 million, as compared to $1.8 million at December 31, 2010.

Operational Highlights:

New credit facility obtained, expanding available access to capital at lower interest rates

“Our multi-front strategies for increasing revenues are paying off,” stated Chris Reed, Founder, Chairman and CEO of Reed’s Inc. “We are taking bold steps to capitalize on our many capabilities and to introduce new products and extend the reach of our great brands.”

“Our business is accelerating, and all systems are firing,” stated James Linesch, Reed’s Chief Financial Officer. “Our sales and distribution network is expanding, our production capabilities are increasing and improving, and we have a great pipeline of new products. 2012 will be a pivotal year for our company.”

Conference Call

The Company will conduct a conference call @ 4:15PM EDT on Monday, March 26th to discuss its 2011 results and outlook for the rest of 2012. To participate in the call, please dial the following number 5 to 10 minutes prior to the scheduled call time (866) 240-5139. International callers should dial (713) 481-0091.

Reed’s, Inc. makes the top selling natural sodas in the natural foods industry sold in over 10,500 natural food markets and supermarkets nationwide. Its six award-winning non-alcoholic Ginger Brews are unique in the beverage industry, being brewed, not manufactured and using fresh ginger, spices and fruits in a brewing process that predates commercial soft drinks. The Company owns the top selling root beer line in natural foods, the Virgil’s Root Beer product line, and the top selling cola line in natural foods, the China Cola product line. Other product lines include: Reed’s Ginger Candies and Reed’s Ginger Ice Creams. In 2009, Reed’s started producing private label natural beverages for select national chains.

Reed’s products are sold through specialty gourmet and natural food stores, mainstream supermarket chains, retail stores and restaurants nationwide, and in Canada, as well as through private label relationships with major supermarket chains. For more information about Reed’s, please visit the company’s website at: http://www.reedsinc.com or call 800-99-REEDS.

Some portions of this press release, particularly those describing Reed’s goals and strategies, contain “forward-looking statements.” These forward-looking statements can generally be identified as such because the context of the statement will include words, such as “expects,” “should,” “believes,” “anticipates” or words of similar import. Similarly, statements that describe future plans, objectives or goals are also forward-looking statements. While Reed’s is working to achieve those goals and strategies, actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. These risks and uncertainties include difficulty in marketing its products and services, maintaining and protecting brand recognition, the need for significant capital, dependence on third party distributors, dependence on third party brewers, increasing costs of fuel and freight, protection of intellectual property, competition and other factors, any of which could have an adverse effect on the business plans of Reed’s, its reputation in the industry or its expected financial return from operations and results of operations. In light of significant risks and uncertainties inherent in forward-looking statements included herein, the inclusion of such statements should not be regarded as a representation by Reed’s that they will achieve such forward-looking statements. For further details and a discussion of these and other risks and uncertainties, please see our most recent reports on Form 10-KSB and Form 10-Q, as filed with the Securities and Exchange Commission, as they may be amended from time to time. Reed’s undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. — FINANCIAL TABLES FOLLOW

REED’S, INC.

STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2011 and 2010

2011

2010

Sales

$

25,013,000

$

20,376,000

Cost of tangible goods sold

15,847,000

13,118,000

Cost of goods sold – idle capacity

1,761,000

1,195,000

Gross profit

7,405,000

6,063,000

Operating expenses:

Delivery and handling expenses

2,307,000

1,728,000

Selling and marketing expense

2,470,000

2,319,000

General and administrative expense

2,878,000

2,740,000

Total operating expenses

7,655,000

6,787,000

Loss from operations

(250,000

)

(724,000

)

Interest expense

(691,000

)

(586,000

)

Net loss

(941,000

)

(1,310,000

)

Preferred stock dividend

(65,000

)

(73,000

)

Net loss attributable to common stockholders

$

(1,006,000

)

$

(1,383,000

)

Loss per share available to common stockholders – basic and diluted

$

(0.09

)

$

(0.14

)

Weighted average number of shares outstanding – basic and diluted

10,785,719

10,186,600

MODIFIED EBITDA SCHEDULE

Year ended December 31,

2011

2010

(unaudited)

(unaudited)

Net loss

$

(941,000

)

$

(1,310,000

)

Modified EBITDA adjustments:

Depreciation and amortization

653,000

616,000

Interest expense

691,000

586,000

Stock option and warrant compensation

300,000

198,000

Other stock compensation for services and finance fees

131,000

366,000

Total EBITDA adjustments

1,775,000

1,766,000

Modified EBITDA income from operations

$

834,000

$

456,000

The Company defines modified EBITDA (a non-GAAP measurement) as net loss before interest, taxes, depreciation and amortization, and non-cash expense for securities. Other companies may calculate modified EBITDA differently. Management believes that the presentation of modified EBITDA provides a measure of performance that approximates cash flow before interest expense, and is meaningful to investors.

REED’S, INC.

BALANCE SHEETS

December 31, 2011

December 31, 2010

ASSETS

Current assets:

Cash

$

713,000

$

1,084,000

Inventory

6,099,000

4,555,000

Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $135,000 and $105,000, respectively

1,626,000

1,295,000

Prepaid inventory

168,000

138,000

Prepaid and other current assets

123,000

78,000

Total Current Assets

8,729,000

7,150,000

Property and equipment, net of accumulated depreciation of $1,739,000 and $1,178,000, respectively